opec’s perspective on oil market developments · 1 organization of the petroleum exporting...
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1
Organization of the Petroleum Exporting CountriesOrganization of the Petroleum Exporting Countries
OPECOPEC’’s perspectives perspectiveonon
oil market developments oil market developments
7th APEC Energy Ministers’ Meeting
19 October 2005Gyeongju, Republic of Korea
Dr Adnan Shihab-EldinActing for the Secretary General
2
Strong growth in APEC economies (e.g, China): growing faster than the world with significant contribution to the global GDPGlobalization process (export-led growth, increasing role of FDI)
-2
0
2
4
6
8
10
2000 2001 2002 2003 2004 2005 2006
USA
APECWorld
Japan
China
(%)
Rates of economic growth(real terms, at 1995 PPP)
-2
0
2
4
6
8
10
2000 2001 2002 2003 2004 2005 2006
USA
APECWorld
Japan
China
(%)
Rates of economic growth(real terms, at 1995 PPP)
-2
0
2
4
6
8
10
2000 2001 2002 2003 2004 2005 2006
USA
APECWorld
Japan
China
(%)
Rates of economic growth(real terms, at 1995 PPP)
-2
0
2
4
6
8
10
2000 2001 2002 2003 2004 2005 2006
USA
APECWorld
Japan
China
(%)
Rates of economic growth(real terms, at 1995 PPP)
-2
0
2
4
6
8
10
2000 2001 2002 2003 2004 2005 2006
USA
APECWorld
Japan
China
(%)
Rates of economic growth(real terms, at 1995 PPP)
-2
0
2
4
6
8
10
2000 2001 2002 2003 2004 2005 2006
USA
APECWorld
Japan
China
(%)
Rates of economic growth(real terms, at 1995 PPP)
As the most economically dynamic region in the world, the Asia-Pacific now accounts ~ 60% of global energy demand. The first 3 largest oil consumers are within APEC
17 2137
24 13
243
6
12
61 56
0
10
20
30
40
50
60
70
80
GDP incre
ment
World
GDP
APEC GDP
USA China Japan APEC
(%)
Contribution of APEC economies
17 2137
24 13
243
6
12
61 56
0
10
20
30
40
50
60
70
80
GDP incre
ment
World
GDP
APEC GDP
USA China Japan APEC
(%)
Contribution of APEC economies
World economic growth & APEC economiesWorld economic growth & APEC economies
3
13
3837
5859 54
0
10
20
30
40
50
60
70
80
Oil N.gas
Reserves Production Demand
(%)
13
3837
5859 54
0
10
20
30
40
50
60
70
80
Oil N.gas
Reserves Production Demand
APEC oil & gas profile: 2004
(%)
% shares of the wordl : 2004
13
3837
5859 54
0
10
20
30
40
50
60
70
80
Oil N.gas
Reserves Production Demand
(%)
13
3837
5859 54
0
10
20
30
40
50
60
70
80
Oil N.gas
Reserves Production Demand
APEC oil & gas profile
(%)
% shares of the world: 2004
13
3837
5859 54
0
10
20
30
40
50
60
70
80
Oil N.gas
Reserves Production Demand
(%)
13
3837
5859 54
0
10
20
30
40
50
60
70
80
Oil N.gas
Reserves Production Demand
APEC oil & gas profile: 2004
(%)
% shares of the wordl : 2004
13
3837
5859 54
0
10
20
30
40
50
60
70
80
Oil N.gas
Reserves Production Demand
(%)
13
3837
5859 54
0
10
20
13
3837
5859 54
0
10
20
30
40
50
60
70
80
Oil N.gas
Reserves Production Demand
(%)
13
3837
5859 54
0
10
20
30
40
50
60
70
80
Oil N.gas
Reserves Production Demand
APEC oil & gas profile: 2004
(%)
% shares of the wordl : 2004
13
3837
5859 54
0
10
20
30
40
50
60
70
80
Oil N.gas
Reserves Production Demand
(%)
13
3837
5859 54
0
10
20
30
40
50
60
70
80
Oil N.gas
Reserves Production Demand
APEC oil & gas profile
(%)
% shares of the world: 2004
13
3837
5859 54
0
10
20
30
40
50
60
70
80
Oil N.gas
Reserves Production Demand
(%)
13
3837
5859 54
0
10
20
30
40
50
60
70
80
Oil N.gas
Reserves Production Demand
APEC oil & gas profile: 2004(%
)
% shares of the wordl : 2004
13
3837
5859 54
0
10
20
30
40
50
60
70
80
Oil N.gas
Reserves Production Demand
(%)
13
3837
5859 54
0
10
20
30
40
50
60
70
80
Oil N.gas
Reserves Production Demand
APEC oil & gas profile(%
)
% shares of the world: 2004
13
3837
5859 54
0
10
20
30
40
50
60
70
80
Oil N.gas
Reserves Production Demand
(%)
13
3837
5859 54
0
10
20
30
40
50
60
70
80
Oil N.gas
Reserves Production Demand
APEC oil & gas profile: 2004(%
)
% shares of the wordl : 2004
13
3837
5859 54
0
10
20
30
40
50
60
70
80
Oil N.gas
Reserves Production Demand
(%)
13
3837
5859 54
0
10
20
13
3837
5859 54
0
10
20
30
40
50
60
70
80
Oil N.gas
Reserves Production Demand
(%)
13
3837
5859 54
0
10
20
30
40
50
60
70
80
Oil N.gas
Reserves Production Demand
APEC oil & gas profile: 2004(%
)
% shares of the wordl : 2004
13
3837
5859 54
0
10
20
30
40
50
60
70
80
Oil N.gas
Reserves Production Demand
(%)
13
3837
5859 54
0
10
20
30
40
50
60
70
80
Oil N.gas
Reserves Production Demand
APEC oil & gas profile(%
)
% shares of the world: 2004
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
mb/
d
mb/
d
2004 was the highest oil demand growth in 25 years.
Last 3 years avg: 1.9Last 10 years avg: 1.4Last 20 years avg: 1.2
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
mb/
d
mb/
d
2004 was the highest oil demand growth in 25 years.
Last 3 years avg: 1.9Last 10 years avg: 1.4Last 20 years avg: 1.2
Oil demand growth (mb/d)
Oil demand growth (mb/d)
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
2000 2001 2002 2003 2004 2005 2006*
USA China Others
Last 3 years avg: 1.9Last 10 years avg: 1.4Last 20 years avg: 1.2
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
2000 2001 2002 2003 2004 2005 2006*
USA China Others
Last 3 years avg: 1.9Last 10 years avg: 1.4Last 20 years avg: 1.2
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
2000 2001 2002 2003 2004 2005 2006*
USA China Others
Last 3 years avg: 1.9Last 10 years avg: 1.4Last 20 years avg: 1.2
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
2000 2001 2002 2003 2004 2005 2006*
USA China Others
Last 3 years avg: 1.9Last 10 years avg: 1.4Last 20 years avg: 1.2
0369
121518212427
India
China
Brazil
UK USA
Oil demand, barrels per capita per year
0369
121518212427
India
China
Brazil
UK USA
Oil demand, barrels per capita per year
Per capita oil demand ratiosIndia China
Brazil 6 3UK 14 7USA 34 16
0369
121518212427
India
China
Brazil
UK USA
Oil demand, barrels per capita per year
0369
121518212427
India
China
Brazil
UK USA
Oil demand, barrels per capita per year
Per capita oil demand ratiosIndia China
Brazil 6 3UK 14 7USA 34 16
0369
121518212427
India
China
Brazil
UK USAOil demand, barrels per capita per year
0369
121518212427
India
China
Brazil
UK USAOil demand, barrels per capita per year
Per capita oil demand ratiosIndia China
Brazil 6 3UK 14 7USA 34 16
0369
121518212427
India
China
Brazil
UK USAOil demand, barrels per capita per year
0369
121518212427
India
China
Brazil
UK USAOil demand, barrels per capita per year
Per capita oil demand ratiosIndia China
Brazil 6 3UK 14 7USA 34 16
4
1.1
0.5
1.30.8
-0.8
-0.3
0.3
0.8
1.3
1.8
2000 2001 2002 2003 2004 2005 2006*-0.8
-0.3
0.3
0.8
1.3
1.8
C h i n a OECD Pacific OECD W.Europe OECD N.America
Total DCs Fsu- ex Russia Net Non-OPEC
Russia
Last 3y avg: 0.9
Last 10y avg: 0.8
Last 20y avg: 0.4
1.1
0.5
1.30.8
-0.8
-0.3
0.3
0.8
1.3
1.8
2000 2001 2002 2003 2004 2005 2006*-0.8
-0.3
0.3
0.8
1.3
1.8
C h i n a OECD Pacific OECD W.Europe OECD N.America
Total DCs Fsu- ex Russia Net Non-OPEC
Russia
Last 3y avg: 0.9
Last 10y avg: 0.8
Last 20y avg: 0.4
1.1
0.5
1.30.8
-0.8
-0.3
0.3
0.8
1.3
1.8
2000 2001 2002 2003 2004 2005 2006*-0.8
-0.3
0.3
0.8
1.3
1.8
C h i n a OECD Pacific OECD W.Europe OECD N.America
Total DCs Fsu- ex Russia Net Non-OPEC
Russia
Last 3y avg: 0.9
Last 10y avg: 0.8
Last 20y avg: 0.4
1.1
0.5
1.30.8
-0.8
-0.3
0.3
0.8
1.3
1.8
2000 2001 2002 2003 2004 2005 2006*-0.8
-0.3
0.3
0.8
1.3
1.8
C h i n a OECD Pacific OECD W.Europe OECD N.America
Total DCs Fsu- ex Russia Net Non-OPEC
Russia
Last 3y avg: 0.9
Last 10y avg: 0.8
Last 20y avg: 0.4
Non-OPEC supplyyear-on-year change, mb/d
Non-OPEC supplyyear-on-year change, mb/d
81
100
32
124 3 2
0
20
40
60
80
100
120
North S
ea US
Canada
Mexico KZ
India
Ecuad
or2005: estimated production losses (mb)
It would equate to ~ 650tb/d.81
100
32
124 3 2
0
20
40
60
80
100
120
North S
ea US
Canada
Mexico KZ
India
Ecuad
or2005: estimated production losses (mb)
It would equate to ~ 650tb/d.
81
100
32
124 3 2
0
20
40
60
80
100
120
North S
ea US
Canada
Mexico KZ
India
Ecuad
or
2005: estimated production losses (mb)
It would equate to ~ 650tb/d.81
100
32
124 3 2
0
20
40
60
80
100
120
North S
ea US
Canada
Mexico KZ
India
Ecuad
or
2005: estimated production losses (mb)
It would equate to ~ 650tb/d.
Russian oil supply growth
0
100
200
300
400
500
600
700
800
900
Jan-
04Fe
b-04
Mar-0
4Ap
r-04
May-
04Ju
n-04
Jul-0
4Au
g-04
Sep-
04Oc
t-04
Nov-
04De
c-04
Jan-
05Fe
b-05
Mar-0
5Ap
r-05
May-
05Ju
n-05
Jul-0
5Au
g-05
Sep-
05Oc
t-05
Nov-
05De
c-05
mb/
d
-1%0%1%2%3%4%5%6%7%8%9%10%11%
y-o-
ygro
wth,
%
Volume % growth
Russian oil supply growth
0
100
200
300
400
500
600
700
800
900
Jan-
04Fe
b-04
Mar-0
4Ap
r-04
May-
04Ju
n-04
Jul-0
4Au
g-04
Sep-
04Oc
t-04
Nov-
04De
c-04
Jan-
05Fe
b-05
Mar-0
5Ap
r-05
May-
05Ju
n-05
Jul-0
5Au
g-05
Sep-
05Oc
t-05
Nov-
05De
c-05
mb/
d
-1%0%1%2%3%4%5%6%7%8%9%10%11%
y-o-
ygro
wth,
%
Volume % growth
0
100
200
300
400
500
600
700
800
900
Jan-
04Fe
b-04
Mar-0
4Ap
r-04
May-
04Ju
n-04
Jul-0
4Au
g-04
Sep-
04Oc
t-04
Nov-
04De
c-04
Jan-
05Fe
b-05
Mar-0
5Ap
r-05
May-
05Ju
n-05
Jul-0
5Au
g-05
Sep-
05Oc
t-05
Nov-
05De
c-05
mb/
d
-1%0%1%2%3%4%5%6%7%8%9%10%11%
y-o-
ygro
wth,
%
Volume % growth
While growth in non-OPEC supply up to 2003 were exceeding that of demand, since then had been significantly below demand growth However, Non-OPEC supply in 2005 has been affected by unplanned shut-downs & a lower rate of growth from RussiaGradual recovery & growth in West Africa, Brazil, Canada & FSU
Russian oil supply growth
0
100
200
300
400
500
600
700
800
900
Jan-
04Fe
b-04
Mar-0
4Ap
r-04
May-
04Ju
n-04
Jul-0
4Au
g-04
Sep-
04Oc
t-04
Nov-
04De
c-04
Jan-
05Fe
b-05
Mar-0
5Ap
r-05
May-
05Ju
n-05
Jul-0
5Au
g-05
Sep-
05Oc
t-05
Nov-
05De
c-05
mb/
d
-1%0%1%2%3%4%5%6%7%8%9%10%11%
y-o-
ygro
wth,
%
Volume % growth
Russian oil supply growth
0
100
200
300
400
500
600
700
800
900
Jan-
04Fe
b-04
Mar-0
4Ap
r-04
May-
04Ju
n-04
Jul-0
4Au
g-04
Sep-
04Oc
t-04
Nov-
04De
c-04
Jan-
05Fe
b-05
Mar-0
5Ap
r-05
May-
05Ju
n-05
Jul-0
5Au
g-05
Sep-
05Oc
t-05
Nov-
05De
c-05
mb/
d
-1%0%1%2%3%4%5%6%7%8%9%10%11%
y-o-
ygro
wth,
%
Volume % growth
0
100
200
300
400
500
600
700
800
900
Jan-
04Fe
b-04
Mar-0
4Ap
r-04
May-
04Ju
n-04
Jul-0
4Au
g-04
Sep-
04Oc
t-04
Nov-
04De
c-04
Jan-
05Fe
b-05
Mar-0
5Ap
r-05
May-
05Ju
n-05
Jul-0
5Au
g-05
Sep-
05Oc
t-05
Nov-
05De
c-05
mb/
d
-1%0%1%2%3%4%5%6%7%8%9%10%11%
y-o-
ygro
wth,
%
Volume % growth
5
30.0
29.1
27.0
25.4
4.6
1.6
3.726.9
28.328.9
21
23
25
27
29
31
2002 2003 2004 2005*0
1
2
3
4
5IraqOPEC-10OPEC-11 cumulative change (since 2002)Call of OPEC
Note: OPEC production excludes OPEC NGL & non-conventional oil (estimated to be 4.3 mb/d in 2005).
*/ based on actual OPEC production until September and then maintaining September levels for the rest of the year.
OPEC response:additional supplies on the market by using the spare capacity (>4mb/d)accelerated projects to expand production capacity to meet rising demand & maintain spare capacity
30.0
29.1
27.0
25.4
4.6
1.6
3.726.9
28.328.9
21
23
25
27
29
31
2002 2003 2004 2005*0
1
2
3
4
5IraqOPEC-10OPEC-11 cumulative change (since 2002)Call of OPEC
Note: OPEC production excludes OPEC NGL & non-conventional oil (estimated to be 4.3 mb/d in 2005).
*/ based on actual OPEC production until September and then maintaining September levels for the rest of the year.
OPEC response:additional supplies on the market by using the spare capacity (>4mb/d)accelerated projects to expand production capacity to meet rising demand & maintain spare capacity
30.0
29.1
27.0
25.4
4.6
1.6
3.726.9
28.328.9
21
23
25
27
29
31
2002 2003 2004 2005*0
1
2
3
4
5IraqOPEC-10OPEC-11 cumulative change (since 2002)Call of OPEC
Note: OPEC production excludes OPEC NGL & non-conventional oil (estimated to be 4.3 mb/d in 2005).
*/ based on actual OPEC production until September and then maintaining September levels for the rest of the year.
OPEC response:additional supplies on the market by using the spare capacity (>4mb/d)accelerated projects to expand production capacity to meet rising demand & maintain spare capacity
30.0
29.1
27.0
25.4
4.6
1.6
3.726.9
28.328.9
21
23
25
27
29
31
2002 2003 2004 2005*0
1
2
3
4
5IraqOPEC-10OPEC-11 cumulative change (since 2002)Call of OPEC
Note: OPEC production excludes OPEC NGL & non-conventional oil (estimated to be 4.3 mb/d in 2005).
*/ based on actual OPEC production until September and then maintaining September levels for the rest of the year.
OPEC response:additional supplies on the market by using the spare capacity (>4mb/d)accelerated projects to expand production capacity to meet rising demand & maintain spare capacity
Source: OPEC
Cumulative increase:Demand, OPEC, Non- OPEC (mb/d)
4.14.6
1.7
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
2003 2004 2005
mb/
d
Demand OPEC (Crude + NGLs) Non OPEC Total SupplySource: OPEC
Cumulative increase:Demand, OPEC, Non- OPEC (mb/d)
4.14.6
1.7
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
2003 2004 2005
mb/
d
Demand OPEC (Crude + NGLs) Non OPEC Total Supply
Source: OPEC
Cumulative increase:Demand, OPEC, Non- OPEC (mb/d)
4.14.6
1.7
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
2003 2004 2005
mb/
d
Demand OPEC (Crude + NGLs) Non OPEC Total SupplySource: OPEC
Cumulative increase:Demand, OPEC, Non- OPEC (mb/d)
4.14.6
1.7
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
2003 2004 2005
mb/
d
Demand OPEC (Crude + NGLs) Non OPEC Total Supply
O E C D com m ercia l o il s tocks
2300
2400
2500
2600
2700
2800
2900
Jan Feb M ar Apr M ay Jun Jul Aug Sep O c t N ov D ec2300
2400
2500
2600
2700
2800
2900
A vg. 00-04
2004
2005
M in-M ax range : 1994 -2004
A vg.00-04
2003
2004
51
48
50
52
54
56
58
Jan Feb M ar Apr M ay Jun Jul Aug Sep O ct N ov D ec
48
50
52
54
56
58C los ing levels , m b D ays of forw ard c over
O E C D com m ercia l o il s tocks
2300
2400
2500
2600
2700
2800
2900
Jan Feb M ar Apr M ay Jun Jul Aug Sep O c t N ov D ecJan Feb M ar Apr M ay Jun Jul Aug Sep O c t N ov D ec2300
2400
2500
2600
2700
2800
2900
A vg. 00-04
2004
2005
M in-M ax range : 1994 -2004
A vg.00-04
2003
2004
51
48
50
52
54
56
58
Jan Feb M ar Apr M ay Jun Jul Aug Sep O ct N ov D ec
48
50
52
54
56
58C los ing levels , m b D ays of forw ard c over
OECD commercial oil stocks
2300
2400
2500
2600
2700
2800
2900
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec2300
2400
2500
2600
2700
2800
2900
Avg. 00-04
2004
2005
Min-Max range: 1994-2004
Avg.00-04
2003
2004
51
48
50
52
54
56
58
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
48
50
52
54
56
58Closing levels, mb Days of forward cover
OECD commercial oil stocks
2300
2400
2500
2600
2700
2800
2900
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecJan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec2300
2400
2500
2600
2700
2800
2900
Avg. 00-04
2004
2005
Min-Max range: 1994-2004
Avg.00-04
2003
2004
51
48
50
52
54
56
58
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
48
50
52
54
56
58Closing levels, mb Days of forward cover
OPEC response:higher production leading to significant stock build up
OPEC response:higher production leading to significant stock build up
6
27,000
28,000
29,000
30,000
31,000
32,000
33,000
34,000
1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q0627,000
28,000
29,000
30,000
31,000
32,000
33,000
34,000
OPEC 11 OPEC-11 Production, Av. SS Required OPEC crude
OPEC Crude, Production and Requirements in theShort term
27,000
28,000
29,000
30,000
31,000
32,000
33,000
34,000
1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q0627,000
28,000
29,000
30,000
31,000
32,000
33,000
34,000
OPEC 11 OPEC-11 Production, Av. SS Required OPEC crude
OPEC Crude, Production and Requirements in theShort term
27,000
28,000
29,000
30,000
31,000
32,000
33,000
34,000
1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q0627,000
28,000
29,000
30,000
31,000
32,000
33,000
34,000
OPEC 11 OPEC-11 Production, Av. SS Required OPEC crude
OPEC Crude, Production and Requirements in theShort term
27,000
28,000
29,000
30,000
31,000
32,000
33,000
34,000
1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q0627,000
28,000
29,000
30,000
31,000
32,000
33,000
34,000
OPEC 11 OPEC-11 Production, Av. SS Required OPEC crude
OPEC Crude, Production and Requirements in theShort term
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2005 2006 2007 2008 2009 20100
200
400
600
800
1000
1200
1400
Heavy Medium Light Net Capacity Addition (mb/d)
OPEC gross & net capacity additions by type
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2005 2006 2007 2008 2009 20100
200
400
600
800
1000
1200
1400
Heavy Medium Light Net Capacity Addition (mb/d)
OPEC gross & net capacity additions by type
OPEC capacity additions: lighter streamsOPEC capacity additions: lighter streams
7
OPEC-10 capacity expansion(by country)
80
198
238
94200
28
278
70
Algeria Indonesia Iran Kuwait LibyaNigeria Qatar KSA UAE Ven Source: OPEC
70110
70
30025
200
100
100
(end 2004 – end 2005) (end 2005 – end 2006)OPEC-10 capacity expansion
(by country)
80
198
238
94200
28
278
70
Algeria Indonesia Iran Kuwait LibyaNigeria Qatar KSA UAE Ven Source: OPEC
70110
70
30025
200
100
100
(end 2004 – end 2005) (end 2005 – end 2006)
Accelerated OPEC capacity expansion plansAccelerated OPEC capacity expansion plans
26283032343638404244464850
2004 2005 2006 2007 2008 2009 201026283032343638404244464850
OPEC 10 Iraq Base NGLHigh High (in NGL)
Non-OPEC supply :Increase in non-OPEC supply up to 2010 is expected to be ~5 mb/d, or even moreaccording to some other sources.
Accordingly, increase in total oil supply capacity is expected to reach ~12 mb/d, or more.
26283032343638404244464850
2004 2005 2006 2007 2008 2009 201026283032343638404244464850
OPEC NGL High High (in NGL)
26283032343638404244464850
2004 2005 2006 2007 2008 2009 201026283032343638404244464850
OPEC 10 Iraq Base NGLHigh High (in NGL)
Non-OPEC supply :Increase in non-OPEC supply up to 2010 is expected to be ~5 mb/d, or even moreaccording to some other sources.
Accordingly, increase in total oil supply capacity is expected to reach ~12 mb/d, or more.
26283032343638404244464850
2004 2005 2006 2007 2008 2009 201026283032343638404244464850
OPEC NGL High High (in NGL)
26283032343638404244464850
2004 2005 2006 2007 2008 2009 201026283032343638404244464850
OPEC NGL High High (in NGL)
26283032343638404244464850
2004 2005 2006 2007 2008 2009 201026283032343638404244464850
OPEC 10 Iraq Base NGLHigh High (in NGL)
Non-OPEC supply :Increase in non-OPEC supply up to 2010 is expected to be ~5 mb/d, or even moreaccording to some other sources.
Accordingly, increase in total oil supply capacity is expected to reach ~12 mb/d, or more.
26283032343638404244464850
2004 2005 2006 2007 2008 2009 201026283032343638404244464850
OPEC NGL High High (in NGL)
8
Refinery utilization trend: shrinking refinery spare capacity!
6 0
6 5
7 0
7 5
8 0
8 5
9 0
9 5
1 9 8 0 1 9 8 4 1 9 8 8 1 9 9 2 1 9 9 6 2 0 0 0 2 0 0 4
US AO EC DW O R L D
S ource: B P S tatis t ic a l R eview , 2005.
Refinery utilization trend: shrinking refinery spare capacity!
60
65
70
75
80
85
90
95
1980 198 4 1988 1992 1996 200 0 2 004
US AO EC DW O R LD
S ource: BP S tatis t ic al Review, 2005.
0%
10%
20%
30%
40%
50%
60%
70%
80%
2000 2001 2002 2003 2004
USA and Canada Northern EuropeMediterranean Asia
Ratio of conversion total refinery capacity
OPEC S t i t
0%
10%
20%
30%
40%
50%
60%
70%
80%
2000 2001 2002 2003 2004
USA and Canada Northern EuropeMediterranean Asia
Ratio of conversion total refinery capacity
OPEC S i
O v e r l o a d i n g o f R e f i n i n g I n d u s t r y
* / A s i a = J a p a n , S o u t h K o r e a , C h i n a , I n d i a a n d S i n g a p o r e . F o r s o m e A s i a n c o u n t r i e s M a y i s e s t i m a t e d .
S h r i n k i n g R e f i n i n g S p a r e C a p a c i t y i n k e y r e f i n e r y r e g i o n s
0
1
2
3
4
5
6
7
8
J a n -0 2
J u l -0 2
J a n -0 3
J u l -0 3
J a n -0 4
J u l -0 4
J a n -0 5
m b / d
E U 1 5 & N o r w a y U S A A s i a *
I n c r e a s i n g R e f i n e r y U t i l i z a t i o n R a t e i n k e y m a r k e t s
7 5
8 0
8 5
9 0
9 5
1 0 0
J a n -0 2
J u l -0 2
J a n -0 3
J u l -0 3
J a n -0 4
J u l -0 4
J a n -0 5
%
E U 1 5 & N o r w a y U S A A s i a *
Overloading of Refining Industry
*/Asia = Japan, South K orea, China, India and Singapore. For some Asian countries M ay is estima ted.
Shrinking Refining Spare Capacity in key refinery regions
0
1
2
3
4
5
6
7
8
Jan-02
Jul-02
Jan-03
Jul-03
Jan-04
Jul-04
Jan-05
mb/d
EU15 & Norway USA Asia*
Increasing Refinery Utilization Rate in key m arkets
75
80
85
90
95
100
Jan-02
Jul-02
Jan-03
Jul-03
Jan-04
Jul-04
Jan-05
%
EU15 & Norway USA Asia*
Tightness in global refinery system Tightness in global refinery system
9
OPEC is attending to rising product demand both domestic & Asia-pacific region, as well as to meet higher product specificationsPursue global downstream investments, particularly in Asia-pacific region By implementing of these plans, they would be able to install over 4.6 mb/d new capacity (i.e. about 3.8 mb/d refinery capacity and 800,000 b/d condensate splitter).Major part of these new capacities will be invested by Saudi Arabia and Kuwait. Similarly most of these projects would be either in the Middle East or in Asia.
Downstream challengesDownstream challenges
Investment needs in the refinery sector: 2005 - 2015Investment needs in the refinery sector: 2005 - 2015Refinery Expansion by
OPEC Member Countries
Total
Under
Consideration
Planning
Construction
0
500
1000
1500
2000
2500
3000
3500
4000
1,400
1,860
578 3,838
Condensate Splitter Unit Expansion
by OPEC Member Countries
Planning
Construction
Total
0
100
200
300
400
500
600
700
800
900
660
146 806
Refinery Expansion by
OPEC Member Countries
Total
Under
Consideration
Planning
Construction
0
500
1000
1500
2000
2500
3000
3500
4000
1,400
1,860
578 3,838
Condensate Splitter Unit Expansion
by OPEC Member Countries
Planning
Construction
Total
0
100
200
300
400
500
600
700
800
900
660
146 806
(up to 2010) (up to 2010)
10
Gains from US gasoline price risesGains from US gasoline price rises
The Washington Post issue of 25 September 2005 calculated that, in the USA, when the average price of a gallon of regular gasoline peaked at $3.07 recently, the nation’s refiners were getting more than three times the amount they earned the year before, when the same gasoline sold for $1.87. However, the companies that pumped oil from the ground gained only 46 %.
$1.92$1.52
$1.00
$0.88
$0.46$0.31
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
March 1981 3-Oct
(per
gal
lon
cons
tant
200
5 $)
TaxesMfg/MktCrude
$3.11$2.98
$1.92$1.52
$1.00
$0.88
$0.46$0.31
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
March 1981 3-Oct
(per
gal
lon
cons
tant
200
5 $)
TaxesMfg/MktCrude
$3.11$2.98
Components of Retail Gasoline Prices
$1.92$1.52
$1.00
$0.88
$0.46$0.31
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
March 1981 3-Oct
(per
gal
lon
cons
tant
200
5 $)
TaxesMfg/MktCrude
$3.11$2.98
$1.92$1.52
$1.00
$0.88
$0.46$0.31
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
March 1981 3-Oct
(per
gal
lon
cons
tant
200
5 $)
TaxesMfg/MktCrude
$3.11$2.98
Source: API statistics
Components of Retail Gasoline Prices
$1.92$1.52
$1.00
$0.88
$0.46$0.31
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
March 1981 3-Oct
(per
gal
lon
cons
tant
200
5 $)
TaxesMfg/MktCrude
$3.11$2.98
$1.92$1.52
$1.00
$0.88
$0.46$0.31
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
March 1981 3-Oct
(per
gal
lon
cons
tant
200
5 $)
TaxesMfg/MktCrude
$3.11$2.98
Components of Retail Gasoline Prices
$1.92$1.52
$1.00
$0.88
$0.46$0.31
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
March 1981 3-Oct
(per
gal
lon
cons
tant
200
5 $)
TaxesMfg/MktCrude
$3.11$2.98
$1.92$1.52
$1.00
$0.88
$0.46$0.31
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
March 1981 3-Oct
(per
gal
lon
cons
tant
200
5 $)
TaxesMfg/MktCrude
$3.11$2.98
$1.92$1.52
$1.00
$0.88
$0.46$0.31
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
March 1981 3-Oct
(per
gal
lon
cons
tant
200
5 $)
TaxesMfg/MktCrude
$3.11$2.98
Components of Retail Gasoline Prices
$1.92$1.52
$1.00
$0.88
$0.46$0.31
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
March 1981 3-Oct
(per
gal
lon
cons
tant
200
5 $)
TaxesMfg/MktCrude
$3.11$2.98
$1.92$1.52
$1.00
$0.88
$0.46$0.31
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
March 1981 3-Oct
(per
gal
lon
cons
tant
200
5 $)
TaxesMfg/MktCrude
$3.11$2.98
Source: API statistics
Components of Retail Gasoline Prices
0
8
16
24
32
40
48
1-Aug 8-Aug 15-Aug 22-Aug 29-Aug 6-Sep 13-Sep 20-Sep27-Sep 4-Oct0
20
40
60
80
100
120HO - WTI GA - WTI Heating oil (HO) Gasoline (GA) WTI Dubai
(US
$/bb
l)
$1.92$1.52
$1.00
$0.88
$0.46$0.31
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
March 1981 3-Oct
(per
gal
lon
cons
tant
200
5 $)
TaxesMfg/MktCrude
$3.11$2.98
Components of Retail Gasoline Prices
$1.92$1.52
$1.00
$0.88
$0.46$0.31
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
March 1981 3-Oct
(per
gal
lon
cons
tant
200
5 $)
TaxesMfg/MktCrude
$3.11$2.98
Source: API statistics
Components of Retail Gasoline Prices
$1.92$1.52
$1.00
$0.88
$0.46$0.31
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
March 1981 3-Oct
(per
gal
lon
cons
tant
200
5 $)
TaxesMfg/MktCrude
$3.11$2.98
Components of Retail Gasoline Prices
$1.92$1.52
$1.00
$0.88
$0.46$0.31
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
March 1981 3-Oct
(per
gal
lon
cons
tant
200
5 $)
TaxesMfg/MktCrude
$3.11$2.98
Source: API statistics
Components of Retail Gasoline Prices
0
8
16
24
32
40
48
1-Aug 8-Aug 15-Aug 22-Aug 29-Aug 6-Sep 13-Sep 20-Sep 27-Sep 4-Oct0
20
40
60
80
100
120HO - WTI GA - WTI Heat ing oil (HO) Gasoline (GA) WTI Dubai
(US
$/bb
l)
11
Incremental product demand compared with crude and refining capacity expansion
Sources: Capacity estimates based on published reports by different sources as well as Secretariat assessment
Lag in investment will allow capacity build up only as of 2007
1.0
1.5
2.0
2.5
3.0
2005 2006 2007 2008 2009 2010
mb/d
0.0
0.5
1.0
1.5
2.0
2.5
3.0
mb/d
Crude Demand (reference)Demand (tight market) Refining Capacity
After Katrina0.5
0.0
Refinery expansion lagging behind demand growthRefinery expansion lagging behind demand growth
12
Growing use of oil futures as a form of financial instrumentNYMEX hit a record high in 2005 surpassing the record in 2004.The average volume of contracts rose in 2005 to 237 million contracts compared to 179 million contracts in 2003OPEN interest also shows a higher record in 2005 of 792 million contracts compared to 542 million contracts in 2003
Increasing activity in the Futures market Increasing activity in the Futures market
36
43
50
57
64
71
5-Oct-04 30-Nov-04 25-Jan-05 22-Mar-05 17-May-05 12-Jul-05 6-Sep-05600
680
760
840
920
1000
Open interest WTI
(US
$/bb
l)O
pen interest (futures)'000 contracts
NYMEX open interest (futures) vs. WTI price
13
?
0
20
40
60
80
100
Jan-
80Ja
n-81
Jan-
82Ja
n-83
Jan-
84Ja
n-85
Jan-
86Ja
n-87
Jan-
88Ja
n-89
Jan-
90Ja
n-91
Jan-
92Ja
n-93
Jan-
94Ja
n-95
Jan-
96Ja
n-97
Jan-
98Ja
n-99
Jan-
00Ja
n-01
Jan-
02Ja
n-03
Jan-
04Ja
n-05
0
20
40
60
80
100Average Nominal Real**/ inflation & exchange-rate adjusted.(Base: August 2005=100, US$/b)
?
0
20
40
60
80
100
Jan-
80Ja
n-81
Jan-
82Ja
n-83
Jan-
84Ja
n-85
Jan-
86Ja
n-87
Jan-
88Ja
n-89
Jan-
90Ja
n-91
Jan-
92Ja
n-93
Jan-
94Ja
n-95
Jan-
96Ja
n-97
Jan-
98Ja
n-99
Jan-
00Ja
n-01
Jan-
02Ja
n-03
Jan-
04Ja
n-05
0
20
40
60
80
100Average Nominal Real**/ inflation & exchange-rate adjusted.(Base: August 2005=100, US$/b)
Although reaching historical highs in nominal terms, the real value are still well below levels reached in early 1980s.
?
0
20
40
60
80
100
Jan-
80Ja
n-81
Jan-
82Ja
n-83
Jan-
84Ja
n-85
Jan-
86Ja
n-87
Jan-
88Ja
n-89
Jan-
90Ja
n-91
Jan-
92Ja
n-93
Jan-
94Ja
n-95
Jan-
96Ja
n-97
Jan-
98Ja
n-99
Jan-
00Ja
n-01
Jan-
02Ja
n-03
Jan-
04Ja
n-05
0
20
40
60
80
100Average Nominal Real**/ inflation & exchange-rate adjusted.(Base: August 2005=100, US$/b)
?
0
20
40
60
80
100
Jan-
80Ja
n-81
Jan-
82Ja
n-83
Jan-
84Ja
n-85
Jan-
86Ja
n-87
Jan-
88Ja
n-89
Jan-
90Ja
n-91
Jan-
92Ja
n-93
Jan-
94Ja
n-95
Jan-
96Ja
n-97
Jan-
98Ja
n-99
Jan-
00Ja
n-01
Jan-
02Ja
n-03
Jan-
04Ja
n-05
0
20
40
60
80
100Average Nominal Real**/ inflation & exchange-rate adjusted.(Base: August 2005=100, US$/b)
The price of oil: distinguishing between nominal and real, (US$/b)
The price of oil: distinguishing between nominal and real, (US$/b)
Steady decline in oil intensities!
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1975 1980 1985 1990 1995 2000
W orld USA Japan China APEC
Oil intensityboe / PPP-$1,000 (1995) GDP
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1975 1980 1985 1990 1995 2000
W orld USA Japan China APEC
Oil intensityboe / PPP-$1,000 (1995) GDP
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1975 1980 1985 1990 1995 2000
W orld USA Japan China APEC
Oil intensityboe / PPP-$1,000 (1995) GDP
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1975 1980 1985 1990 1995 2000
W orld USA Japan China APEC
Oil intensityboe / PPP-$1,000 (1995) GDP
APEC
APEC
14
The strategy recognises important role of oil: in world economy for socio-economic development of OPEC Member Countries
It defines specific objectives, identifies key challenges and explores scenarios for energy scene
It is designed to be robust and adaptive
It provides coherent and consistent vision and framework for OPEC’s future
OPEC Long-Term Strategy 1/2OPEC Long-Term Strategy 1/2
15
Objectives relate to:long-term petroleum revenues of Member Countriesfair and stable pricesrole of oil in meeting future energy demandstability of oil marketsecurity of regular supplies to consumerssecurity of oil demandlegitimate interests of Member Countries in multilateral agreements
The identified key challenges concern:uncertainties surrounding future oil demand (world economy, consuming countries’ policies, technological developments, etc.) supply side, taking into account: resources, potential non-OPEC production, extent and timing of required investment, together with associated uncertainties
OPEC Long-Term Strategy 2/2OPEC Long-Term Strategy 2/2
16
Oil Demand Outlook, mb/dOil Demand Outlook, mb/d
“Four-fifths of the increase in demand of 30 mb/d over the period 2005–2025 comes from developing countries Transportation continues to be the dominant source of growth (~60 %)Many uncertainties: GDP, technology, policy – substantial downside risks
Reference 2010 2015 2020 2025
OECD 51.4 52.7 53.8 54.7DCs 34.4 40.3 46.4 52.8Transition economies 5.1 5.4 5.7 5.9
Total World 90.9 98.4 105.9 113.4
Tight market scenario 93.1 101.9 111.2Soft market scenario 89.2 94.4 99.0
111.299.0
17
OPEC (incl. NGLs)
Reference 2005 2010 2020 2025OECD 20.9 20.9 19.9 19.3DCs excl. OPEC 16.1 18.2 19.4 18.9Russia & Caspian 11.7 13.1 14.9 15.3
Non -OPEC 50.5 54.3 56.8 56.4OPEC (incl. NGLs) 33.1 36.6 49.1 57.0
World 83.6 90.9 105.9 113.4OPEC Market Share % 40 40 46 50
Tight market scenario 33. 7 40.4 53.9Soft market scenario 32.6 32.7 42.6
Oil production outlook, mb/dOil production outlook, mb/d
Key sources of non-OPEC increase: Latin America, Africa, Russia and CaspianOPEC increasingly supplies incremental barrelSignificant medium- to long-term uncertainties
53.942.6
18
Proven reserves 891 billion barrels 78% of world figureProduction > 30 million barrels a day ~ 40% of world figureExports > 21 million barrels a day ~50% of world figure
Cheaper to exploit than non-OPEC oilIncreasing call on OPEC oil in coming years>50% world oil market projected for 2025
Proven CrudeOil Reserves
15.0
21.3
Crude Oil Production
12.4
58.5
Proven GasReserves
9.8
51.0
Gas Marketed Production
7.8
83.0
0
10
20
30
40
50
60
70
80
90
100
Proven CrudeOil Reserves
Crude Oil Production
Proven GasReserves
Gas Marketed ProductionOPEC Middle East OPEC Rest Non-OPEC
ch63.7
29.1
39.2
9.2
Oil Resources
Source : OPEC
P rov en C ru deO il R e s e rv es
1 5 .0
2 1 .3
C ru d e O il P ro d u c tio n
1 2 .4
5 8 .5
P rov en G asR e se rv e s
9 .8
5 1 .0
G a s M a rk e te d P ro d u c tio n
7 .8
8 3 .0
0
1 0
2 0
3 0
4 0
5 0
6 0
7 0
8 0
9 0
1 00
P rove n C ru deO il R e serve s
C ru de O il P ro d u ctio n
P rove n G asRe serv e s
G as M arke te d P ro d u ctio nO P E C M id d le E a s t O P E C R e s t No n -O P E C
ch6 3 .7
2 9 .1
3 9 .2
9 .2
P rov en C ru deO il R e s e rv es
1 5 .0
2 1 .3
C ru d e O il P ro d u c tio n
1 2 .4
5 8 .5
P rov en G asR e se rv e s
9 .8
5 1 .0
G a s M a rk e te d P ro d u c tio n
7 .8
8 3 .0
0
1 0
2 0
3 0
4 0
5 0
6 0
7 0
8 0
9 0
1 00
P rove n C ru deO il R e serve s
C ru de O il P ro d u ctio n
P rove n G asRe serv e s
G as M arke te d P ro d u ctio nO P E C M id d le E a s t O P E C R e s t No n -O P E C
ch6 3 .7
2 9 .1
3 9 .2
9 .2
Oil Resources
Source : OPEC
Oil resources and availabilityOil resources and availability
19
Dialogue and cooperationDialogue and cooperation
Continued cooperation & genuine dialogue: underlying consensus on handling major issues of mutual concern for the benefit of all.
International Energy Forum; International Energy Agency; APEC;EU-OPEC Energy Dialogue; Euro-Mediterranean Dialogue;EU-Gulf Cooperation Council; Asian Oil and Gas Ministers Round Table; Non-OPEC at OPEC Conferences; OPEC & Non-OPEC experts meetings …
Effective engagement on all interrelated issuesSecurity of supply and demandPrice stabilityEnergy policiesMultilateral issues (e.g., Kyoto Protocol, WTO)Technology (e.g., cleaner oil technologies, CO2 sequestration with EOR)
Shared responsibility
20
Organization of the Petroleum Exporting CountriesOrganization of the Petroleum Exporting Countries